I've thought a little bit more about your question: "Now, if it opens down and closes down, what does it mean, technically speaking?"
Assuming that your question is what if TOL has a down day tomorrow, what would that mean?, my initial response is in almost 99% of the scenarios I can imagine, nothing.
If you have a charting service that can take you back in time, look at the daily candle for 1/20/05, a down day after 5 rising days. What did that candle mean? Nothing. A little pullback to close at 73.64. The next day's candle was down again. What did it mean? Nothing.
That is, nothing in the sense of the trend of the stock. In the course of 2 days the stock which had run up to about 75 now retraced a little within the 10,8 Bollinger Bands, volume fell off and certain indicators relaxed from bullishness toward neutrality. But in the sense of "meaning," nothing at all.
The chart (the market) will deliver its meaning when it wishes and not before. Trying to presuppose what will transpire beyond the mysterious right edge of a chart is perilous business at best, especially perilous when predicting that a long term, intact trend will suddenly stop and reverse.
If I had to weigh the probabilities of TOL's chart tomorrow, after a very very powerful looking candle today, I'd say probabilities favor a higher open and a higher close, and that would be the way to play the underlying or the options on this name.
Let's continue to monitor this stock, detailed analysis of this test case will reveal certain market verities for us to study and learn.
Kb |
